ProductsQuestion 1 of 110
How is the net asset value (NAV) per share of an open-end investment company calculated?
a.Total assets divided by the number of shares outstanding
b.Total assets minus total liabilities, divided by the number of shares outstanding
c.The market price of the fund's shares at the close of trading on the exchange
d.Total assets minus total liabilities, divided by the number of shareholders of record
Explanation
NAV per share is the fund's net worth (assets less liabilities) spread over the shares outstanding, computed at least once each business day. Ignoring liabilities overstates value, so the first choice is wrong. Open-end fund shares do not trade on an exchange at a market price, and dividing by shareholders rather than shares produces a meaningless figure.
Law Reference: Investment Company Act of 1940Practice all 110 questions free — no signup required.
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